DUBAI, (AP) — Dubai said Sunday it has pumped 6.2 billion dollars into Dubai World and that it is prepared to put even more money into the conglomerate whose debt woes caused global market jitters late last year.
The Dubai Financial Support Fund, set up in February last year to aid indebted state-run corporations, “has put over 6.2 billion dollars into Dubai World Group over the past 12 months,” a government spokeswoman told AFP.
“The DFSF stands ready to put considerably more money into the company in line with the announcement it made” in December, when the government forked out 4.1 billion dollars to cover maturing bonds owed by Nakheel, the giant property arm of Dubai World.
Dubai was able to rescue Nakheel from an imminent default thanks to a last-minute lifeline from neighbouring Abu Dhabi, which brought Abu Dhabi’s total financial aid to Dubai since the global financial crisis hit the emirate to 10 billion dollars.
The Abu Dhabi-backed central bank of the United Arab Emirates also paid 10 billion dollars last February.
Although Dubai World is owned by the government, the spokeswoman stressed that the funds were extended on a commercial basis.
“This money was made available to the DFSF on commercially reasonable terms, and the DFSF has endeavoured to advance these funds to the company on a commercial basis,” she said, without disclosing the rate of interest offered.
“These funds would be used for, among other things, working capital and interest expenses for the company’s creditors,” the spokeswoman said on condition of anonymity.
Dubai World began late December negotiations with creditors to restructure some 22 billion dollars in debt owed by its troubled subsidiaries. So far, no agreement has been reported.
“The DFSF and the company are operating within the internationally accepted principles in order to ensure a fair and equitable process for all creditors,” she said.
The DFSF and Dubai World “are committed to concluding a mutually acceptable consensual restructuring,” she added.
Dubai alarmed global financial markets when it announced late November that it needed to freeze debt payments by Dubai World for at least six months in order to restructure the group.
The announcement spread fears of a possible default by the once-booming city state whose accumulated debt is estimated between 80 billion dollars and 100 billion dollars, although some reports said it could be as high as 170 billion.